Starved of credit, construction suppliers lag housing rebound

 

 

 

 

‎”Don’t wait. The time will never be just right.”

— Napoleon Hill: was an author and pioneer of the

personal development genre

 

 

 

DAILY REAL ESTATE NEWS | TUESDAY, JULY 16, 2013

By Sagarika Jaisinghani and Siddharth Cavale  Mon Jul 15, 2013 11:54am EDT

(Reuters) – When marketing executive Vanessa Sobers moved to Houston to take up a new job, she decided to buy her own home.

That was four months ago. The former New York resident now believes she will be waiting at least a year to move into a new house as builders, short on materials, grapple with an expanding backlog of orders.

“The inventory of houses here is so low, it’s insane,” she said.

U.S. homebuilders have booked higher orders for seven consecutive quarters, but a shortage of building supplies means construction is lagging demand.

A wider housing market recovery has yet to filter down to regional building products makers – the companies that supply the roofing, walls and interior fittings needed to build these new homes.

They are operating in a much tighter credit market, and with workforces pruned during the recession triggered by the housing market crash in 2007.

Analysts say the long road to recovery has already been priced into the shares of these companies, some of which could be overpriced having ridden the coat-tails of the wider housing market rebound.

Shares of Masco Corp (MAS.N), which makes faucets, cabinets and insulation products, are trading at around $20 – above the intrinsic value of $14.98 measured by Thomson Reuters StarMine.

The StarMine model is a measure of how much a stock should be worth currently when considering expected growth rates over the next 15 years and adjusting for analysts’ systematic biases.

“It’s a really attractive industry from an economic perspective but … from a valuation perspective we find it less attractive,” said David Manger, a portfolio manager at AMI Investments and a former Masco shareholder.

Fortune Brands Home & Security Inc (FBHS.N), the maker of Moen faucets and Master Lock padlocks, is trading above $40 per share versus an intrinsic value of $26.94. Architectural stone maker Headwaters Inc (HW.N) trades at about $9.45 versus $5.51.

Headwaters Chief Executive Kirk Benson says the South Jordan, Utah-based company is “dramatically different” from the outfit that employed 5,000 people before the recession. Today, its workforce numbers about 2,300.

Despite high unemployment in the construction sector, many former carpenters and masons are hesitant about returning to the volatile industry after losing their jobs.

“Construction is not proceeding as fast as it might have had there been an ample supply of labor,” said Chad Crow, chief financial officer at Builders FirstSource Inc (BLDR.O). “I think that will probably be the trend over the next year or two.”

THE END OF EASY MONEY

Crow’s company, a middleman between builders and suppliers, is facing a particular shortage of oriented strand boards – strands of wood bonded with wax, which are the most common type of roofing material in the United States.

Twenty-two percent of homebuilders have reported a shortage of these boards, a report published by the National Association of Home Builders in June showed. (r.reuters.com/kec69t)

“In the past six months, we have had instances where we wanted to buy more materials than the companies could sell us,” said Crow.

Limited access to credit is also restricting the ability of building products suppliers to raise production to meet demand.

Wary of a repeat of the reckless lending that led to the last housing crisis, the U.S. Federal Reserve has imposed tougher regulation that has made big banks reluctant to lend to small suppliers.

The recession, however, has also swallowed many of the small regional banks that fed the building products sector pre-crisis, said David Crowe, chief economist at the National Association of Home Builders.

A U.S. government report published last month said the failure of banks with assets of $1 billion or less was driven largely by credit losses on commercial real estate loans – particularly those to finance land development and construction. (r.reuters.com/bed98t)

Between January 2008 and December 2011 – a period of economic downturn in the United States – 414 insured U.S. banks failed. Of these, 85 percent were small banks, the report said.

BlueTarp Financial, one of the few specialty lenders still providing credit to housing product makers, does not expect lending to recover any time soon.

“Until you know unequivocally that the housing market has returned, you are going to be more reticent if you are a bank,” BlueTarp Chief Executive Scott Simpson told Reuters. “Big banks are not going to lead the field in lending.”

For Sobers and other prospective home owners like her, the wait will go on.

 

 

a little about me and my expertise – video

LAND SPECIALIST – LAND EXPERT – INVESTMENT BROKER – ARIZONA

https://www.youtube.com/watch?v=PPs3kpKR4nY

 

LAND SALES IN PHOENIX from 4-10-2013

http://walter-unger.com/?p=7956

 

Feel free to contact Walter regarding any of these stories, the current market, distressed commercial real estate opportunities and needs, your property or your Investment Needs for Comercial Investment Properties in Phoenix.

 

 

View my listings and my profile at:

http://www.loopnet.com/profile/14101172900/Walter-Unger-CCIM/Listings/

 

www.Walter-Unger.com

www.KLCommercialGroup.com

 

What is a CCIM?

 

 

Please go to my web-site and get all the newsflashes and updates in Commercial Investment Real Estate in Phoenix and Commercial Investment Properties in Phoenix daily

 

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Walter Unger CCIM, CCSS, CCLS

I am a successful Commercial Investment Real Estate Broker in Arizona now for 15 years and I worked with banks and their commercial REO properties for 3 years. I am also a commercial and  Landspecialist in Phoenix and a Landspecialist in Arizona.

1.

WHETHER YOU LEASE OR OWN

NOW IS THE TIME FOR YOU TO EXPAND, UPGRADE OR INVEST.

 

In my opinion we are at bottom of the cycle in Commercial Real Estate in Phoenix, so there is only one way and it’s called we are going up again and now is the time for you to expand, upgrade or invest in Commercial Properties in Phoenix.  The prices on deals I may get you will not be around forever.

 

2.

IF YOU OR ANYBODY YOU KNOW IS IN TROUBLE WITH YOUR BUSINESS, AS MANY AMERICANS ARE IN THE MOMENT, AND ARE ABOUT TO LOSE YOUR COMMERCIAL PROPERTY, PLEASE CONTACT ME.  IF YOUR BANK IS BEHAVING BADLY I MAY BE ABLE TO HELP YOU GET OUT OF SOME OR MAYBE A LOT OF FUTURE HEADACHES.

 

3.

WAITING TO SELL YOUR LAND ? TIMES CHANGE / IT’S TIME

  We barely could give land away the last few years, but times are changing.  Even in those meager years, I sold more land across the state than most other brokers. Before the real estate crash I was a land specialist in Arizona with millions of dollars of transactions, but then I had to change and also sell other commercial investment properties, which was fun, but I am a Commercial Landspecialist in Arizonal, a Commercial Land Specialist in Phoenix and love to sell land, one acre to thousands of acres.

Since I was a Land Specialist in Arizona and a Land Speciaost in Phoenix many of my clients, Sellers and Buyers remember me and now they are calling me again, so this is the time to get back into land and none of my clients, including future clients, will miss out on getting their best deal.

Also, if you are up-side down on your land, like many Americans, and the lender is giving you a hard time, now is the time to put your land on the market. Lenders are making deals now with short sales.  I have been working with banks for many years – I learned how to work with them.

 

If you have any questions about the 1 to  3 above, about Commercial Investment Properties in Phoenix or Commercial Investment Properties in Arizona,  I will gladly sit down with you and share my expertise and my professional opinion in Commercial Properties in Phoenix or Commercial Properties in Arizona with you.Obviously I am also in this to make money, but it could be a win-win situation for all of us.

 

Please reply by e-mail walterunger@ccim.net or call me 520-975-5207 (cell)  602-778-5110 (office direct).

 

www.Walter-Unger.com

 

 

 

Thank You

Walter

 

Walter Unger CCIM

Associate Broker

Kasten Long Commercial

2821 E. Camelback Road, Suite 600

Phoenix, AZ 85016

Cell:      520-975-5207

Direct:   602-759-1202

Office :  602-445-4141

Fax:      602-445-4188

walterunger@ccim.net

 

Delivering the New Standard of Excellence in Commercial Real Estate

 

www.walter-unger.com

www.KLCommercialGroup.com

 

 

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